Not every bad decision turns out badly. If it did then there would be fewer bad decisions. As it is, sometimes bad decisions work out and people have less fear. False guides too.
Sometimes you can’t tell what is right in advance. For example.
In 2013 you could have bought, triple crown winner American Pharoah as a yearling for the reserve bid of $300,000. No one did and it is not as if the price was unreasonably high. Of the 151 yearlings auctioned at the same time, 32 brought that much or more.
It can be put down to the curse of knowledge. The buyers knew quite a lot about his pedigree and they were unimpressed. Someone like you or me might have bought the horse because we did not know that he could not possibly be worth that much.
Be a little cautious when relying on “expert opinion.” Experts can be wrong because they know too much. Amateurs are wrong because they know too little. There is no right way to start. Common sense comes into play sometimes but even that will not always make it work. The difference between experts being wrong and amateurs being wrong is that experts tend to be spectacularly wrong. Like in American Pharoah’s case.
How spectacular? Rumor has it that his breeding rights have been sold to Coolmore’s Ashford Stud Farm for $30,000,000. A nice mark-up from $300,000.
To be fair, listing him for sale at $300,000 seems to have been a mistake too. No punishment however. Not all bad decisions are punished and so one has to be a little careful when applying past experience to current decisions.
You cannot be right all the time, even if you make the “right decision” at the time. The key to success is to make decisions based on what you know at the time, recognizing that some will be wrong. When they are wrong, analyze how you decided poorly and what you can do about that should a similar situation appear in the future.
For the ones that turned out wrong notice that some of those decisions were still the right ones. You cannot reasonably hold yourself accountable for things that turned out a certain way by random chance.
You may recall that 1977 triple crown winner Seattle Slew was purchased in a yearling sale for $17,500.
Part of life is just luck.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.